Washington State Clears Boeing Tax Breaks

By Reuters

Nov. 10, 2013

OLYMPIA, Wash. — The Washington State Legislature passed a measure on Saturday to extend nearly $9 billion in tax breaks for Boeing through 2040 in an embattled effort to entice the company to locate production of its newest jet, the 777X, in the Seattle area.

Lawmakers acknowledged, however, that their efforts would most likely be undermined if the airplane maker’s machinists union votes down a proposed labor contract due to go before the membership on Wednesday.

A contract locking in Boeing’s labor costs, along with the tax incentives, is crucial to state officials’ plan to keep the 777X production local. Boeing has said that without approval of the labor contract, it would be looking at other potential locations.

Industry experts say Washington faces competition from states including South Carolina, where Boeing assembles some of its 787 Dreamliners, as well as Texas and Utah.

Japan, whose heavy industry builds wings for the Dreamliner, is seen as a contender to build the wings for the 777X, the longest wings designed for a Boeing jetliner.

The tax measure passed the Washington State Senate by a vote of 42 to 2 on Saturday, with the State House later approving it on a 75-to-11 vote.

Gov. Jay Inslee, a Democrat, said on Saturday that he planned to sign the measure this week.

The $9 billion measure would extend aerospace tax breaks set to expire in 2024 through 2040 and enact incentives for building airplane factories on the condition that Boeing site its 777X wing fabrication and final assembly in Washington State.

“Our vote isn’t near as important as theirs,” Senator Brian Hatfield, a Democrat, said of the vote by members of the International Association of Machinists.

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